Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

America's Most Innovative Companies

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Fortune Global 500

Industries included in the sector are diversified and specialty chemical manufacturers.

Fortune Sector Leaders: Chemicals

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The 200 companies on this list are transforming industries from the inside out.

The 26th edition of the list shows how much esteem Big Tech giants command among other business leaders.

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World's Most Admired Companies

The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

WMA-2023-3M

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

The 300 companies on this list are transforming industries from the inside out.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

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Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

Fortune collaborated with the Diligent Institute to rank the most innovative boards of directors among S&P 500.

Modern Boards 2022 3M

The company founded as the Minnesota Mining and Manufacturing Company makes the list with an impressive and diverse group of directors. 3M’s board scored highly in gender equality, senior independent nonexecutive director representation, and board expertise. While recent results for the company have been impacted by supply-chain constraints and rising inflation, long-term prospects look good.  
 
Patricia A. Woertz, former chairman and CEO of Archer Daniels Midland, is one of six 3M board members (out of 13 total) to have held a CEO post. The others include Gregory R. Page (Cargill), Muhtar Kent (Coca-Cola), Herbert L. Henkel (Ingersoll-Rand), Michael L. Eskew (UPS), and David B. Dillon (Kroger). 3M CEO Michael Roman also serves as the board’s chairman. Dow CEO James R. Fitterling is the other currently active CEO on the board.  
 
Roman has <a href="https://fortune.com/2021/03/09/the-pandemic-was-an-awakening-for-3m-ceo-daily/">called the pandemic</a> an “awakening” for 3M. In the aftermath of George Floyd’s murder, Roman told Fortune in 2021, the Minneapolis-based company increased its focus on the well-being of employees and the economic health of the Twin Cities area. He said that business leaders can “use the same lessons and abilities you have built in business success and apply them more broadly to whatever is most important to your stakeholders—and that includes your employees.” 
 
The former CFOs of Microsoft and Accenture are 3M directors, as is Dambisa Moyo, former global economist at Goldman Sachs and director at Chevron and Condé Nast. 3M’s board also includes Susan Kereere, the head of global business solutions at Fiserv, and Thomas K. Brown, the former group vice president of global purchasing at Ford. These two offer the perspective of the company’s customers, an increasingly important voice to have on any corporate board.

Fortune Modern Board 25

This year’s Fortune 500 marks the 68th running of the list.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

WMAC 2021-24-3M

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

<span data-sheets-value="{&quot;1&quot;:2,&quot;2&quot;:&quot;Conglomerate 3M weathered 2020 thanks to its diverse slate of businesses. While sales in many segments tumbled because of the pandemic, they rose in others. In the positive column were home improvement products (credit all those renovations during lockdown); personal safety items (production of N95 respirators tripled); and filters for biotech labs (as pharma companies pushed to create COVID-19 vaccines). But some of 3M’s other big businesses suffered, including industrial products and office supplies. That’s partly because corporate customers slowed their manufacturing and consumers switched to remote work and therefore didn’t need as many Post-it notes. The result: flat revenue of $32.2 billion in 2020 and profits of $5.38 billion, up nearly 18%.&quot;}" data-sheets-userformat="{&quot;2&quot;:12673,&quot;3&quot;:{&quot;1&quot;:0},&quot;10&quot;:2,&quot;11&quot;:4,&quot;15&quot;:&quot;Calibri&quot;,&quot;16&quot;:12}">Conglomerate 3M weathered 2020 thanks to its diverse slate of businesses. While sales in many segments tumbled because of the pandemic, they rose in others. In the positive column were home improvement products (credit all those renovations during lockdown); personal safety items (production of N95 respirators tripled); and filters for biotech labs (as pharma companies pushed to create COVID-19 vaccines). But some of 3M’s other big businesses suffered, including industrial products and office supplies. That’s partly because corporate customers slowed their manufacturing and consumers switched to remote work and therefore didn’t need as many Post-it notes. The result: flat revenue of $32.2 billion in 2020 and profits of $5.38 billion, up nearly 18%.

Companies on this year's list earned recognition based on surveys of 19.8 million employees worldwide.

GPTW-World's-Best-2021-3M

World’s 25 Best Workplaces

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-96-3M

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

G500-2020-389-3M

Based in St. Paul, Minn, and with corporate operations in 70 countries, 3M makes a wide range of products covering areas from health care to office supplies. The company has been in spotlight throughout the coronavirus pandemic, ramping up its production of N95 respirator masks and partnering with MIT in an attempt to develop a rapid COVID-19 test.

This year's Fortune 500 marks the 66th running of the list.

The St. Paul, Minn.-based company, with corporate operations in 70 countries, makes a wide range of products covering areas from health care to office supplies.

Here are the World's Most Admired Companies for 2019 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.7 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 65th running of the list.

Here are the World's Most Admired Companies for 2018 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 64th running of the list.

Here are the World's Most Admired Companies for 2017 as ranked in their industries. See who made the list.

This year's Fortune 500 marks the 63rd running of the list.

Here are the World's Most Admired Companies for 2016 as ranked in their industries. See who made the list.

This year's Fortune Global 500 generated $27.6 trillion in revenues and $1.5 trillion in profits.

This year's Fortune 500 marks the 62nd running of the list.

Business insiders have spoken: Asked which companies they most admire, more than 4,100 executives, directors, and analysts chose these top 50 All-Stars.

The world's 500 largest companies generated $31.2 trillion in revenues and $1.7 trillion in profits in 2014. Together, this year's Fortune Global 500 employ 65 million people worldwide and are represented by 36 countries.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Global business is back. After limping through a worldwide financial crisis and economic slowdown, the 500 largest companies ranked by revenues shattered all sorts of performance records in 2013: They racked up combined revenues of $31.1 trillion, up 2.5% from 2012, and profits soared 27% to nearly $2 trillion. China’s 95 companies (up from 89 last year) posted $5.8 trillion in revenues. The U.S. has four fewer companies on the list than last year but remains (for now) the country leader, with 128 corporations on the list—including No. 1 Wal-Mart Stores—reporting $8.6 trillion in revenues. 

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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3M is a multinational conglomerate that manufactures industrial, safety, and consumer products. The company sells its merchandise through e-commerce and traditional wholesalers, retailers, and distributors. Founded in 1902 as the Minnesota Mining and Manufacturing Co., 3M is best known for its iconic Scotch tape and Post-it brands.

Q2 2025

Q1 2025

Q4 2024

3M (MMM): Company Profile, Stock Price, News, Rankings

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Ladies and gentlemen, thank you for standing by. Welcome to the 3 ms 4th Quarter Earnings Conference Call.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. As a reminder, this call is being recorded Tuesday, January 21, 2025. I would now like to turn the call over to Chinmay Trivedi, Senior Vice President of Investor Relations and Financial Planning and Analysis at 3 ms.

Thank you. Good morning, everyone, and welcome to the Q4 earnings conference call. With me today are Bill Brown, 3 ms's Chief Executive Officer and Anurag Maheshwari, our Chief Financial Officer. Bill and Anurag will make some formal comments, then we will take your questions. Please note that today's earnings release and slide presentation accompanying this call are posted on the homepage of our Investor Relations website at 3m.com.

Please turn to Slide 2 and take a moment to read the forward looking statements. During today's conference call, we'll be making certain predictive statements that reflect our current views about 3 ms's future performance and financial results. These statements are based on certain assumptions and expectations of future events that are subject to risks and uncertainties. Item 1A of our most recent Form 10 Q lists some of these most important risk factors that could cause actual results to differ from our predictions. Please note, throughout today's presentation, we'll be making references to certain non GAAP financial measures.

Reconciliations of the non GAAP measures can be found in the attachments to today's press release. With that, please turn to Slide 3, and I will hand the call off to Bill. Bill?

Thank you, Chinmay, and good morning, everyone. Before I start, I'd like to welcome Chinmay to his first earnings call as the Head of Investor Relations. He's been with 3 ms for 3 years, leading the FP and A function and was with GE before joining 3 ms. He's replacing Bruce Jermeland, who retired on January 1st. Bruce led IR for the last 6 years and was with 3 ms for more than 2 decades, and we wish him well in his retirement.

2024 was a pivotal year for 3 ms. Earlier in the year, we spun off our healthcare business group as Solventum, and we settled 2 significant legal matters. We also substantially completed the largest restructuring program in company history, which focused on reducing complexity and improving margins. These changes weren't easy, but the team has done a terrific job executing the programs, and the results are showing up in our financial performance. This relentless focus on operational execution drove a strong finish to the year.

4th quarter adjusted earnings per share was $1.68 on 2.1 percent organic revenue growth. The company generated free cash flow of $1,300,000,000 with conversion of 145%. During the quarter, we returned $1,100,000,000 to shareholders via dividends and share repurchases. These results capped a strong year for the company where we delivered $7.30 in adjusted earnings per share at the high end of our guidance and up 21% year over year. Organic sales grew 1.2% and we generated $4,900,000,000 in free cash flow with a conversion rate of 111%.

Turning to Slide 4. The 4th quarter results reflect our focus on the fundamentals. Each business group drove positive adjusted organic growth, the first time in 9 quarters that all business groups grew together, and it was broad based. 12 of our 16 divisions posted positive growth compared to only 7 in the 1st quarter. One of the fundamentals is commercial execution, and we're beginning to make progress in this area.

For example, in Safety and Industrial, we launched a campaign to drive cross selling on our channel partners with some encouraging early results. And this year, we pulled forward the quota setting process for our sales force to ensure we get out of the gates quickly, and we instituted standard work for our sales managers and area leaders who support our frontline sales reps. Reinvigorating the innovation engine is critical to sustain this top line momentum. In 2024, we launched 169 new products, up 32% over the prior year. This was above expectations due in part to the rigor and governance we've put in place around new product introductions, but more importantly, to the enthusiasm of the team to get back to innovating for our customers.

One launch we're particularly excited about is our LCD 2.0 platform program that enables LCD displays for tablets, notebooks and monitors to achieve the brightness and contrast similar to OLED, combining our multilayer optical film technology with our micro replication technology. Another one is our expanded beam optics or EBO connector, which is an optical interconnect designed for data centers that reduces installation time, cleaning and maintenance while delivering exceptional performance. But we're still in the early days of our R and D turnaround effort. NPI is clearly an important metric. And in 2025, we expect to see a double digit increase in the number of launches on top of the higher performance in 'twenty four, but it's just one of several we're tracking.

Over time, we need to work to shorten the development cycle time to increase launch cadence, focus investment dollars on higher octane programs and see NPI translate into higher sales and margins. Also critical to driving growth is improving service and a key metric for us is on time and full or OTIF. OTIF was 88% for the year, up 3 percentage points versus last year and 8 points versus 2022. Our team has made solid progress, but we have more work to do. While consumer and transportation electronics are now consistently delivering to their customers at over 90% on time, our performance in safety and industrial remains well below expectations in the low 80s.

It will take a fundamental shift in our approach to raise service levels to where they need to be, and we're doing this by standardizing the demand planning process, using new algorithms to improve forecast accuracy, improving supplier delivery performance and driving consistency and reliability in logistics. These are key elements of our broader operational excellence program, which continues to mature but is still in the early innings. Our goal remains to deliver 2% net productivity through sourcing efficiency, quality improvement, lean manufacturing and asset utilization, which I described last time as operating equipment efficiency or OEE. These efforts are starting to take hold and will support further gross margin expansion toward our goal of high 40s. We also made progress on inventory days, which was down 2 days versus last year and 8 sequentially, ending the year at 94 days.

This is just a start as our goal is to get to 75 days, freeing up cash for our capital deployment priorities, which include returning cash to shareholders. Last year, we returned $3,800,000,000 to shareholders, dollars 2,000,000,000 in dividends and $1,800,000,000 in share repurchases. Lastly, we continue to assess our portfolio and we have several small actions underway. We'll update you on progress as deals are signed. Moving to guidance on slide 5.

Our strong finish in the Q4 gives us confidence in our ability to deliver in 2025. For the year, we expect organic sales growth in the range of 2% to 3%, adjusted earnings per share in the range of $7.60 to $7.90 and free cash flow conversion of approximately 100%. Our back to basics approach and focus on our 3 top priorities underpins our ability to deliver on these commitments as the macro recovery continues to be uneven. Currently, IPI is forecasted to be 1.9% in 2025, but as you may recall, the forecast for IPI in 2024, 12 months ago was also about 2%, and we ended the year at about 1%. We'll see how that evolves, but we'll be looking to take advantage of this acceleration as it materializes.

Other key data points to watch include auto builds, which are expected to be slightly negative but down 3% to 4% in Europe and the U. S. Where we have better penetration and flat in China and up across Asia where our content per vehicle is lower. Consumer electronics is expected to be up low to mid single digits and consumer discretionary spend remains soft, especially in the U. S.

Where retail sales are expected to be relatively flat. As we navigate the ups and downs of the macro environment, we'll focus as always on what we can control: servicing our customers at higher levels, improving commercial excellence at the customer interface, filling up the innovation pipeline to support future growth and driving productivity and efficiency throughout the organization. We look forward to sharing more details on each of these priorities as well as our medium term outlook during our Investor Day in St. Paul on February 26. You'll hear from our leaders in R and D, supply chain and the business groups about their execution plans that will turn our priorities into results.

I hope to see you there. With that, I'll turn it over to Anurag to walk through the details of the quarter. Anurag?

Thank you, Bill. Turning to Slide 6. We had a strong finish to the year with Q4 performance coming in better than expected. Total adjusted sales were $5,800,000,000 with organic growth up 2.1%. All three business groups had positive adjusted organic growth in the quarter and performed better than our end markets.

In the Q4, global IPI was up 1.4% year on year and the markets we serve trended in line with expectations. Consumer Electronics remained stable, Automotive OEM builds were flat and consumer retail discretionary spending was soft. Geographically, our growth was led by China, up high single digits, driven by our Electronics business, where we continued to gain share and saw modest front loading from an anticipated change in tariffs. The U. S.

Was up low single digits despite the challenging macro backdrop with growth in Aerospace and General Industrial. And EMEA was down low single digits due to the continued weak environment, including a high single digit decline in auto bills. Adjusted operating margins were 19.7%, down 20 basis points year over year and adjusted EPS was 1.68 dollars or $0.05 better than the midpoint of our guidance. The better performance was driven by $0.09 of volume leverage, higher productivity and lower restructuring charges more than offsetting the unexpected $0.04 headwind from FX due to the significant recent U. S.

Dollar strength. I will provide a quick overview of our growth performance for each business group on Slide 7. Safety and Industrial Organics sales grew for the 3rd consecutive quarter with 2.4% growth in the 4th quarter. This growth was broad based with 6 out of 7 divisions posting positive growth. We saw particularly strong demand for e Bonding in Electronics and Hearing and Body Protection in Personal Safety.

In addition, growth was driven from a large few power grid orders as anticipated in Asia and the U. S. For aluminum high capacity conductors and power cable accessories for data centers. For the year, Safety and Industrial sales were approximately CAD11 1,000,000,000 with organic sales growth of 0.7 percent led by strength in e Bonding, Cable Accessories and Auto Body Repair. Roofing Granules add another year of mid single digit growth as we continue to capitalize on the multi year roof replacement cycle.

Transportation and Electronic adjusted sales were up 2% organically in the 4th quarter. The Consumer Electronics business showed continued strength, growing high single digits driven by solid volumes through the holiday season and continued share gains. Aerospace was again up double digits in the quarter, while the auto OEM business was down mid single digits, reflecting continued weakness in global car and light truck bills. For the year, Transportation and Electronics had adjusted organic growth of 3.4%, driven by Electronics, Aerospace and Auto. Our Electronics sales were up approximately 12% from strong market demand combined with new product introductions and spec wins that drove share gains.

Despite a challenging Q4, our auto OEM business was up 2% versus a 1% decline in auto build rates. And the Aerospace business grew double digits again for the year and 50% over the past 2 years, reflecting our focus on growth portfolios. Finally, the Consumer business returned to growth in the 4th quarter, up 1.2% organically. Home Improvement led the way up low single digits, driven by strength during the holiday season for Command, scotch tape and paint protection products. And for the year, our consumer business was down 1.2% with low single digit growth in home improvement sales, mainly Command, more than offset by lowtomidsingledigit declines in the other divisions.

Let me summarize our full year 2024 financial performance on Slide 8. On the back of strong 4th quarter performance, we finished the year with total adjusted sales of CAD23.6 billion and organic growth up 1.2%. All of our business groups were in line with our guidance and from a geographic perspective, we saw solid organic growth in Asia Pacific, up 4.4 percent driven by consistent strength in our Electronics business. In the U. S, despite IPI being down 0.3%, our business was up 0.7%, driven by electrical markets, aerospace, cable accessories and home improvement.

EMEA was down 1.3% due to the decline in auto builds and the weak industrial and manufacturing environment. Our adjusted operating margins expanded 280 basis points above the high end of our guidance range of 2 50 basis points to 2 75 basis points to 21.4%. This performance was driven by benefits from volume leverage, productivity, Solventum transition service agreement cost reimbursements and restructuring, partially offset by FX and investments to drive growth in the business. We delivered $7.30 of EPS for the year, up 21% and at the high end of our guidance range. Over 80% of our year on year performance was driven by strong operational execution.

Finally, we delivered free cash flow of $4,900,000,000 or 111 percent conversion, which included net working capital improvement of 8 days and returned $3,800,000,000 to shareholders in 2024. Please turn to Slide 9 as we look into our 2025 guidance. As Bill indicated, we expect organic sales growth of 2% to 3%, earnings per share of $7.60 to $7.90 representing growth of 4% to 8% and free cash flow conversion of approximately 100%, all on an adjusted basis. We expect all business groups to grow low single digits, which is in line with or above macro. We expect this higher growth trajectory to be supported by a focus on commercial excellence, improvement in service levels and new product launches.

We have largely moved past product portfolio prioritization headwinds and the small amount that remains is incorporated into our guidance and won't be specifically called out going forward. Our EPS growth is anchored by margin expansion in the range of 130 to 190 basis points, which reflects our relentless focus on operational excellence. Adjusted free cash flow conversion is expected to be approximately 100%, driven by strong operating income growth and a focus on working capital management. Adjusted CapEx of approximately $1,000,000,000 will be in line with depreciation and amortization. Let me take a minute to walk through the EPS drivers for 2025 on Slide 10.

We expect EPS growth of 4% to 8%, driven by operational performance that is partially offset by non operational headwinds. We are confident that our focus on operational excellence will contribute $0.70 to $1 or 10% to 14% to adjusted EPS growth. This growth will come from volume, restructuring and net productivity more than offsetting growth investments and stranded costs. We expect non op headwinds of approximately $0.40 half from FX due to recent strengthening of the U. S.

Dollar and the other half from below the line items including pension expense, net interest and tax partially offset by share buyback. We plan for a gross share repurchase program in 2025 to be approximately $1,500,000,000 Putting all this together, we expect strong operating performance and capital deployment to drive EPS growth. As we think about the cadence through the year, we expect sales and EPS to be split equally between the first and second half, in line with historical trends. Within the first half, we expect Q1 sales growth to be similar to Q4 and earnings will reflect the annual equity grants which last year were deferred to Q2. This will result in Q1 earnings being similar to that of last year and we expect sequential improvement into Q2 as we lap the Sorventum spin items with earnings being approximately equal between the two halves.

I want to take a moment to thank the 3 ms team for the strong finish to the year, and I'm confident in our ability to deliver another strong year in 2025 with growth acceleration, strong margin expansion and return cash to our shareholders in excess of $3,000,000,000 With that, let's open the call for questions.

Our first question comes from the line of Jeff Sprague with Vertical Research. Please proceed with your question.

Thank you. Good morning, Bill and Anurag. Just on the top line in particular, Bill, I was wondering if you could give us a sense of to what degree sort of the operational execution, product development has actually impacted the top line already versus what you expect to kind of play out in 2025? Just thinking of some of these product launches and the like came later in the year. So perhaps we could start there.

Good morning, Jeff. Thanks for the question. Yes, we were very pleased with the acceleration of new product introductions, as I mentioned in my remarks, came in above expectations, in fact, quite a bit above the expectations, but still very early. A lot of the products that we're launching are what we call Class III, so they're incremental. So year 1 sales on these products are going to be somewhat light and it will grow over time over the next several years.

More importantly, as we grow our NPI launches next year by double digit, we shift to more, what I call higher octane or Class 4 type products, which have more sales capability, we'd likely see more impact on the top line from these launches. It's an important dimension. I think the team has built momentum. It's part of the governance process. It's a lot of it's the enthusiasm of the team.

Some of it is shifting some resources around. We added 50 people in Q4 and we moved about another 100 people into R and D Development in the quarter. So we're on the right track. There's a good sign. We've got to see it turn into reasonable and substantial margin and income over time.

But whatever we've seen in terms of launches is built into the 2 to 3 guidance we see next year.

Great. And then maybe just one for Anurag. A lot of conversation last year as we're all trying to fine tune our models on kind of the restructuring versus stranded costs and the like. Just wonder within that $0.70 to $1 $0.70 to $1 bridge item on a rod, you could give us a little bit of granularity on restructuring investments in stranded costs in particular.

Okay. Good morning, Jeff. Sure. Let me do that. And probably what I'll do is I'll break the pieces to the bridge.

So at the midpoint of our EPS guidance, we are growing 10% to 14%, excluding the non op items, which is quite strong relative to the midpoint of organic growth. So there are 3 factors for that. One of them is sales volume, which creates significant volume leverage as well as incrementals. So at 2.5% volume growth at the midpoint of the guidance and 35% incrementals, that's about $200,000,000 or so. 2nd is the lower restructuring cost to your specific question.

That's about $200,000,000 tailwind into 2025. So that's another $200,000,000 And finally, on the net productivity, that's about $150,000,000 as well. And lots of pieces in that, The PFAS stranded cost is a negative $100,000,000 We're making some growth investments as well, but offsetting that is overall net productivity through the factories, through our SG and A function as well. So you put all the 3 buckets together, it's about $550,000,000 of margin improvement. FX is offsetting about $125,000,000 of that or so.

So the $425,000,000 is at about at the midpoint of 160 basis points of margin expansion. So those are the 3 big pieces driving the operational growth of $0.70 to $1.

Great. Thank you for that. I'll pass it on.

Our next question comes from the line of Scott Davis with Melius Research. Please proceed with your question.

And thanks for the shorter presentation too. Hey, Bill, you mentioned the quota pull forward. I think you mentioned something about some changes in the sales organization. But if we just back up a little bit, what perhaps you could just frame kind of what you're trying to change with the sales organization and maybe a little bit more detail on what exactly does that mean when you talk about a quota pull forward for as far as trying to drive growth?

Yes. So it's a great question. Thank you for that. When I laid out the original plan around driving top line growth, the basis is around driving more innovation and that's going to take time and I commented on that a little while before. Growth in the near term is going to come from selling more of what we have on the market today and that's an important dimension to this, which is just a more aggressiveness in our frontline sales and marketing resources.

They're dealing with right now with not a lot of new things to say to the customers because we haven't been innovating as much. And our on time in full performance out of the factories has not been that great. It's improving, but it has not been that great. So the sales force is challenged in some ways to sell, and I think they've been on their back feet in some ways. And I think what Chris and the team at SIBG and others across the company are doing is really leaning into this.

So what we're trying to push for is making sure that the sales leaders, the sales reps out in the field, they know what they're expected to do in 2025 early in the year. So that's they're getting out of gates January 1 with their quota, their targets, specific things around closed won wins. Typically that would have been in early April when it rolls out. So a little bit lag. So that's why Q1 might not have had some momentum.

A little more structure around how the sales managers and area leaders are working in terms of their cadence, reviewing progress with their sales reps, that's quite important. Some of the other dimensions that we're pushing on here is around cross selling. It's a pilot, it's 6 combination pairs that we've done, 6 or 8 different distributors. So it's small pieces here. But in December, we saw some pretty good momentum building.

And I'm pretty optimistic that over this year and next that there's going to be some benefits for cross selling. We're working on pricing and reinstituting some price corridors and changing our governance process on our pricing. So when you step back, I think all of this gets back to the original premise was, we've got to get better at selling what we have today on the marketplace. And that's where the back end of 'twenty four and then most of 'twenty five is going to come from, which I think is important to investors to understand that piece. The NPI will come over time.

I'm very confident about that, but we've got to get better at selling more what we have on the market today.

Makes sense, Bill. And just I think when you talk about on time and full, it seems very fundamental. But in theory, if you had 100% on time and full, would your growth rate be 100 basis points higher, 200 basis points higher? Is there any way to kind of narrow that down?

Yes, it's hard to quantify, Scott. It's a good question. Clearly, running at 88% is not where we need to be. We're feeling we're running around 93%, over 93% in consumer. We should be in the high 90s.

That's the expectation of some of the big box retailers. So we're getting there. We're doing better there. We're over 90% in the transportation business. That's good.

It should be better. The concern really is in SIBG, the safety and industrial business in the low 80s. We're definitely losing business for sure there. We are not delivering when somebody needs something right now and we don't have it available. That is causing them to go someplace else, even though we have a better brand, sometimes a better product, an attractive price.

So it is costing us sales. So I do know that as a fundamental part of driving top line, we've got to get better at exercising the supply chain and making sure we meet our customers' expectations.

Our next question comes from the line of Nigel Coe with Wolfe Research. Please proceed with your question.

Good morning. Bill, you sound a little skeptical about the 1.9% IPI forecast just based on that's where we were this time last year. So I'm just wondering when you went through the plan process, looked at the bottoms up kind of projections from the businesses and then you overlaid that with the top down, what kind of haircuts have you taken to that 1.9 percent? And that brings me on to my next question. Well, the real question, I guess.

What have you baked in for pricing in 2025? And then just going forward, what is the sort of framework here? Is it IPI plus price? Is it IPI multiplied by some kind of factor plus price? I mean, any way to think about that growth function going forward?

So it's a good question. I don't think we're going to deconstruct the elements of growth between price and volume and share gain and other parts of it. But look, we did enter 'twenty four with an expectation IPI was going to be a bit better and it softened through the year. There was an expectation of auto builds and that softened quite a bit in the back end of the year. As we were 3 months ago thinking about IPI in 2025, it was higher than we actually are sitting at today, it was on 2.4%.

The auto build was at that point in time higher expectation for 25% than we sit here today. So these indicators, they're just that, they're indicators and we use them. It's an important dimension, but it's sort of a starting point. Of course, we've done a bottoms up review of our business. We feel confident that 2% to 3% is the right place to be.

When you look at a blended macro between IPI and GDP, because we're about 80% weighted to IPI, 20% to GDP, it's around 2.1%. So the center point at 2.5 is a little bit above the macro. We know that some of the initiatives we're putting in place around commercial execution, new product development, getting our factories run a bit better. Those are all very important dimensions. But Nigel, again, it's worth 2, 3 weeks into the year.

We've got a new administration in Washington. There's lots of conversations floating around tariffs. We'll see as the year goes by both progress and traction of some of the initiatives we have internally, plus what happens in the macro and we'll update investors accordingly. So right now we feel good about 2% to 3% is the right place to start in 2025.

Great. Thanks, Bill. And then Anurag, for you. Thanks for the details on the margin bridge. The $150,000,000 of net productivity, that appears to be mainly the payback on the construction actions in 2024.

So I'm just wondering if there's anything from some of the more structural drivers such as improving OEE, improving footprint, supply chain, etcetera.

Yes. There is. So let me break up the $150 in a little bit more detail. Yeah. So first, just on the headwinds over there.

So I said it was $100,000,000 of stranded costs. The incremental investments we are making as well, which is about $225,000,000 some we did in 'twenty four, some in 'twenty five. It's about a carryover as well as in year. So you've added 2 together, it's about $325 ish $350,000,000 Now offsetting that, you're correct. There is a probably $70,000,000 of restructuring benefits, about $280,000,000 But then to get to the positive $150,000,000 we're driving about more than $400,000,000 of net productivity.

And that is coming through again through supply chain, be it procurement, more on the G and A efficiency and a few of the other areas that Bill has spoken about. So overall, I would say the productivity driving is $450,000,000 as being offset by all these other line items to get us to $150,000,000

Our next question comes from the line of Andrew Kaplowitz with Citigroup. Please go ahead with your question.

Bill, you had mentioned in the conference circuit in December that you saw a bit of an uptick in industrial demand in Q4. Did that continue into January here? Do you think it was just related to pre buy ahead of tariffs? Or could it have been a reflection of maybe some modest recovery in short cycle markets? How would you characterize it?

Yes. So we did see, I'd say across the industrial part of the portfolio, not referring to the consumer side, but the industrial part of the portfolio, we did see order rates. First of all, they're very steady through the quarter, which I think was very positive. They're a tick higher than they were in Q3. The order rates were somewhat higher than the growth rate, organic growth rate in the quarter.

So there's a bit of backlog that was built into 2025. Those are all good indicators, but we are a shorter cycle business. So we don't really live off backlog. It's more of a book and ship type business, but there's small little indicators. It was pretty broad based.

There was no specific region or business that was the driver of it. That also is somewhat encouraging. Again, it's and I contrast it to where we were in Q4 of 'twenty three, where I think there was a pretty dramatic tail off in orders towards the back end of December, which got the team a little bit shaken in some ways. We did not see that happen here. So those are all good indicators, which is why when we look at 2%, 2.1% organic growth in Q4, that we feel that that's a good floor, if you will, for 2025.

But I think it's good news. It's holding steady. And again, it's a reflection of some modestly improvements in the industrial markets. But again, it's kind of early days.

Helpful. And then Anurag, can you give more color into 'twenty five margin guidance by segment? And then also comment on T and E margin, particularly in Q4, 'twenty four as it seemed a little weak in Q4 versus the other segments?

Yes. So first, let me talk about Q4 and then I'll get into 'twenty five. So overall, Q4 came in better than expected across from our expectations what we gave in the October guide across all the three segments. And as I noted in my prepared comments, it's probably $0.05 higher than where our midpoint of our guide was because of volume and productivity with FX being the big headwind in the quarter, which was unexpected. Now on TEEBG, we did expect the margins to be lower in Q4 seasonally, of course, between Q3 and Q4 because of under absorption as we clear out inventory.

So that was a big reason. And if you look between Q3 and Q4, you know, sequentially, we improved inventory by 8 days. So that clearly has an absorption issue. 2nd is we started making growth investments, which we are seeing in the revenue right now. That was a driver for it.

And FX, if you TBG does have a fair amount of business outside the U. S. So that impacts it as well. So you put all these three things together, the margin is lower. It actually came in better than what we expected.

So overall, if I look at all the 3 business groups for 2024, the margins came in a little bit better than expected. As we go into 2025, we're probably not giving guidance right now very specific to each of the segments. But the 130 to 190 range that we gave in terms of margin expansion, We expect all the 3 business groups to grow quite a bit. The TEBG could be a little bit lighter than the other 2 because they have the PFAS stranded costs, a large part of it is in TEBG. But having said that, we expect good margin expansion across all the 3 business groups.

Our next question comes from the line of Julian Mitchell with Barclays. Please proceed with your question.

Hi, good morning. Maybe just the first question, trying to understand the sort of operating margin expansion framework. So you talked about, I think, anurag €450,000,000 of overall productivity improvement in 2025. In the past or recent past, let's say, Bill, you've talked about that sort of €250,000,000 to COGS productivity number. So as a sort of annual placeholder.

So just want to understand the kind of delta between that, I'm guessing 450 is not a medium term placeholder because you have some extra savings this year from the 2023 plan. But maybe just help us understand sort of how to think about productivity on top of that 35% core leverage placeholder?

Sure. So Julian, you're correct. What we have said is on the COGS line, 2% net productivity, which is about $250,000,000 The productivity which I'm talking about is overall for the company, which also includes SG and A, other parts of the business as well. It also has a one quarter of the TSA reimbursement, which overlaps over there, too. Right.

So if you so those are the pieces which takes us to 450. I mean, we'll provide more on the Investor Day in terms of the framework looking forward, but I think our goal is still to get 2% net productivity in COGS and for even on SG and A line to see whatever productivity we can get to offset inflation and other investments that we are making.

Thanks a lot. And I'll leave other medium term questions for that event. So maybe just on the very short term Anurag, I think you'd mentioned sort of 1.70 ish of EPS adjusted in Q1. The first half is just under $4 though, I think, based on that 50% comment. So you got a decent sequential step up in the second quarter in EPS.

Maybe just any very large puts and takes, it seems like organic growth pretty steady year on year, but anything you're calling out sort of Q1 to Q2 delta?

Yes. Thanks for the question. So let me break it up into 2 parts. 1 is some discrete items in the Q1 and then second is on the recurring operational performance and non op impact, which you should see through the year. On the discrete items, as I mentioned in my prepared comments, due to the Solvintem spin, there were few pieces, but the large part of it was the equity based compensation, which I called out last year.

We accrued in the Q2 and as this year, as we're returning back to historical trends, we'll be accruing it in the Q1. This is about a $0.15 headwind in the Q1, which becomes a tailwind in the Q2. On the operational side, we'll see good flow through from volume, lower restructuring costs, DSA absorption, all the productivity that we spoke about, which will offset PFAS stranded and mix headwind and also all the growth investments. So this should be about $0.20 to $0.25 of EPS growth in the quarter. On the non op, we have $0.40 for the year.

So the Q1 is probably going to be closer to $0.08 to $0.10 So if you put all these items together, Julian, you got $0.20, $0.25 of operational EPS growth, you minus the $0.08.10 of non op and the $0.15 of equity based comp. So the earnings are flat to Q1 of last year. Now as you move into the Q2, if we continue the similar trajectory on operating performance and the non op headwind, it will be $0.10, dollars 0.15 of EPS growth. And then you add back the $0.15 of the equity based compensation. So the growth in Q2 would be closer to $0.25 $0.30 So that's a bridge between Q1 and Q2.

And then to your math, the first half and second half should be fairly equal in terms of EPS.

3M Q4 2024 Earnings Call Transcript | Fortune

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